James Poulos writes about political news, focusing on our choices for liberty and our options for reform. He's a columnist at The Daily Beast, the host of the Free Radicals podcast, and the frontman of a band called Black Hi-Lighter.

Would You Move to a City That Paid Your Student Loans?

Seth Piccirillo, Niagara Falls’ new director of community development, will attempt to lure young professionals to live in his city’s beleaguered downtown [...] by offering to help them pay down their college loans.

There’s no joy in kicking Niagara Falls when it’s down, but lurking beneath this ‘innovative’ proposal are some real danger signs. One has to do with the prevailing view of how cities revitalize. Another has to do with why cities want to revitalize.

Let’s start with the how. It’s undeniable that city governments facing a steady loss in population and revenues will want to use policies to reverse those trends. Unfortunately, viewing revitalization through a policy lens is likely to foster the misimpression that when revitalization happens, it must be the consequence of policy incentives. Piccirillo, Good Morning America reports, is inspired by Seattle’s Columbia City neighborhood. As Piccirillo tells it:

They set up a young and artistic neighborhood in a small area that included yoga studios, music venues, coffee houses. If you do a search online for Seattle, you’ll see you’d want to spend time in Columbia City. That’s the model in our minds.

The transformation began with artists and other pioneers who found gold restoring classic Craftsman homes near Rainier Avenue in the 1980s. A decade later, as the “Sicilian soul food” restaurant La Medusa started making a name for itself, the area attracted more visitors. By the late 1990s, real-estate prices increased, and stylish new condos and townhouses sprouted where there used to be weeds.

The ‘they’ responsible for Columbia City’s transformation isn’t city officials. Rather than government setting up a trendy neighborhood, individual people simply started doing what they wanted to do, in a place where they found themselves particularly able to do it. Note that ‘the market’ is no more directly responsible for the change than the government. The market followed the pioneers.

In a further misfortune, however, that realization doesn’t do much to dent the reason why cities want to revitalize, if the Niagara Falls case is any indication. It’s not just a preference for active policymaking that’s fueling their determination. “Niagara Falls’ population 50 years ago teetered at 100,000,” the GMA report continues. “Then it began to fall and today it’s half of what it was. If by the time of the next census it’s under 50,000, leaders fear the city will risk the loss of some forms of federal assistance.”

So city officials plan to spend city dollars to incentivize young people to help ensure that the city continues to receive federal dollars? In practice, that might yield some kind of marginal benefit to cities. But the idea seems farfetched that it’ll set off a cascade of revitalization capable of making the difference between being flush with federal cash and losing access to those funds. That’s where the commonplace policymaking spirit of doing something — anything — comes in. But instead of flailing, policymakers might ask what you get when you cross a vicious circle with a ponzi scheme.

It’s not that little incentives necessarily do more harm than good. It’s important to emphasize that Niagara Falls’ plan is very modest, beginning with loan subsidies for students and graduates of Niagara University and Niagara County Community College. Putting the retention of local graduates first makes intuitive sense at first blush. Still, it’s not clear that locals are more likely than new residents to find opportunities to put their skills and ambitions to use in Niagara Falls. And even if the statistics were found to somehow favor the locals in that regard, the assumption behind the public policymaking that would put a premium on that finding is questionable: the individuals who touch off a cascade of revitalization can’t be captured or predicted very well through non-experimental quantitative social science.

It’s hard to escape the feeling that Niagara Falls is ultimately more concerned about retaining locals than revitalizing neighborhoods, because retaining locals ensures that its federal subsidies don’t dry up. And it’s all too easy to see how other cities across the country would share the same dependency mentality. One innovative policy that might help break out of that attitude is offering to pay the student loans of highly-educated but low- (as in negative-) net-worth graduates willing to relocate. But it’s perhaps easiest of all to see how city officials and local citizens would be made uneasy — or worse — by the prospect of paying ‘the more privileged’ to ‘take the place’ of hometown city dwellers. Beneath the surface of America’s municipal financial crises awaits an even more fundamental reckoning with the limits of policy and politics to turn around diminishing cities.

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